Democrats in the House introduce PAYGO

[techs]

http://news.yahoo.com/s/ap/20070105/ap_on_go_co/congress_rdp_48

The PAYGO rule would require tax cuts to have corresponding cuts in government spending or tax increases elsewhere to pay for them. Likewise, any increase in entitlement programs like Medicare would have to have corresponding tax increases, or equal cuts in other government programs.

If strictly enforced, the PAYGO rule would make it difficult for Democrats to pass increases in federal benefit programs such as Medicare. In the near term, it would mean Democrats' bill to cut student loan rates will be less generous than they'd like. The rule would also threaten efforts to extend Bush's tax cuts, most of which expire at the end of 2010.

This is putting the American taxpayer on a collision course with higher taxes," said Paul Ryan of Wisconsin, top Republican on the Budget Committee.

"Today, we are cutting our national credit card," countered Heath Shuler, D-N.C., during floor debate Friday. To underscore the point, Shuler cut a credit card in half at a news conference populated by moderate-to-conservative "Blue Dog" Democrats who are most responsible for implementing the rule.



I am surprised and impressed. I thought the Dems would wait a couple of years to try and go to PAYGO.
And it is almost unbelievable that Republican Ryan would stand up for the irresponsible previous Republican House that spent and spent and borrowed and borrowed and tax cut and tax cut until our countries deficit almost doubled in just a few years.
Kudos to the Dems!

 

[ProfJohn]

I think it is a good plan.

EXCEPT: they still rely on the old idea that tax cuts lead to less taxes, and that has been proven false time and time again.

What we need is a plan or idea that controls spending. The problem is the spending, not the tax cuts. We are still growing government spending at like 7% a year WAY to much.

Get the growth figure down to 4-5% where it belongs.

 

[techs]

Originally posted by: ProfJohn
I think it is a good plan.

EXCEPT: they still rely on the old idea that tax cuts lead to less taxes, and that has been proven false time and time again.

What we need is a plan or idea that controls spending. The problem is the spending, not the tax cuts. We are still growing government spending at like 7% a year WAY to much.

Get the growth figure down to 4-5% where it belongs.

EXCEPT: they still rely on the old idea that tax cuts lead to less taxes, and that has been proven false time and time again.
I must be having a slow brain day. I don't get your meaning. Are you referring to Republicans?

 

[theeedude]

No, He is talking about the Laffer curve, the basis for supply side Reaganomics, which brought us huge deficits every time it was tried.

 

[crownjules]

Originally posted by: techs
This is putting the American taxpayer on a collision course with higher taxes," said Paul Ryan of Wisconsin, top Republican on the Budget Committee.

Only if you needlessly continue to overspend in government, Mr Ryan. Your party was once the champion of financial conservatism. In the past, we would have expected such a proposal from your party and not the Democrats.

That aside, it is definitely a step in the right direction to balancing the nation's checkbook.

 

[hellokeith]

Washington D.C. has proven it does not know how to control spending. This will be the same until America folds.

 

[crownjules]

Originally posted by: hellokeith
Washington D.C. has proven it does not know how to control spending. This will be the same until America folds.

President Clinton and the corresponding Congress would like a word with you.

 

[Genx87]

I am not totally against this however it could end up like a balanced budget amendment. Spend a bunch then tax a bunch to pay for it.

The problem is spending, not taxation. We are taxed enough in this country to pay for this ridiculous federal govt.

 

[Genx87]

Originally posted by: crownjules

Originally posted by: hellokeith
Washington D.C. has proven it does not know how to control spending. This will be the same until America folds.

President Clinton and the corresponding Congress would like a word with you.

Those were the good old days, when republicans acted like republicans.
Then Newt got run out of town and the place hasnt been the same since.

 

[WHAMPOM]

Originally posted by: crownjules

Originally posted by: techs
This is putting the American taxpayer on a collision course with higher taxes," said Paul Ryan of Wisconsin, top Republican on the Budget Committee.

Only if you needlessly continue to overspend in government, Mr Ryan. Your party was once the champion of financial conservatism. In the past, we would have expected such a proposal from your party and not the Democrats.

That aside, it is definitely a step in the right direction to balancing the nation's checkbook.

But history shows "championing" does not mean "practicing".

 

[LegendKiller]

Originally posted by: ProfJohn
I think it is a good plan.

EXCEPT: they still rely on the old idea that tax cuts lead to less taxes, and that has been proven false time and time again.

What we need is a plan or idea that controls spending. The problem is the spending, not the tax cuts. We are still growing government spending at like 7% a year WAY to much.

Get the growth figure down to 4-5% where it belongs.

The problem is both.

As far as your laffer curve example. The Laffer curve exists in a vacuum where only one variable is changed and all others are constant, that one variable is the tax rate. However, applying the curve in the real world is almost impossible and using it as an example borders on the insane.

In the cases where taxes have been cut and revenues have gone up, there have been other factors included in that equation, many independant variables that cause the same variation in the dependant variable. The biggest of those is the economic environment that cannot be controlled by simple tax cuts.

For example, Bush's latest tax cut occurred during a housing boom, which wasn't driven by taxes but by low interest costs and high demand driven by the same. The equity cash-out and high appreciation gains after sale lead to a massive spending spree and large tax inflows as Americans were doing better. Jobs were (and are) high, as are wages, also increasing tax input. None of this had to do with the actual tax cut. Cutting taxes didn't do much for interest rates, nor the cause the primary motivator for appreciating houses or the desire to earn the next dollar that would be taxed less.

Reagan's upshoot was nothing more than the continuation of the economic cycle, which had been in a recessed downcycle and naturally (reversion to the mean) went back up. His plethoric spending the defense area certainly helped, but taxes were a small affect on the dependant variable.

So, we have a boom economy not caused by taxes, which leads to higher tax collections. Is this a prime example of trickle down economics? Heck no, nor was Reagan's ideas either. Both just drove us more in debt than ever before. Meanwhile, foolish Republicans utilize both examples as evidence of some type of economic miracle, which is utterly false.

 

[WHAMPOM]

Originally posted by: techs
http://news.yahoo.com/s/ap/20070105/ap_on_go_co/congress_rdp_48

The PAYGO rule would require tax cuts to have corresponding cuts in government spending or tax increases elsewhere to pay for them. Likewise, any increase in entitlement programs like Medicare would have to have corresponding tax increases, or equal cuts in other government programs.

If strictly enforced, the PAYGO rule would make it difficult for Democrats to pass increases in federal benefit programs such as Medicare. In the near term, it would mean Democrats' bill to cut student loan rates will be less generous than they'd like. The rule would also threaten efforts to extend Bush's tax cuts, most of which expire at the end of 2010.

This is putting the American taxpayer on a collision course with higher taxes," said Paul Ryan of Wisconsin, top Republican on the Budget Committee.

"Today, we are cutting our national credit card," countered Heath Shuler, D-N.C., during floor debate Friday. To underscore the point, Shuler cut a credit card in half at a news conference populated by moderate-to-conservative "Blue Dog" Democrats who are most responsible for implementing the rule.



I am surprised and impressed. I thought the Dems would wait a couple of years to try and go to PAYGO.
And it is almost unbelievable that Republican Ryan would stand up for the irresponsible previous Republican House that spent and spent and borrowed and borrowed and tax cut and tax cut until our countries deficit almost doubled in just a few years.
Kudos to the Dems!

Tactics. They want the REPUBs to shoot it down and take the blame. Besides PAYGO as a fiscal policy is one big crock-O-$h1t! Just plain unworkable to the nines.

 

[LegendKiller]

Originally posted by: Genx87

Originally posted by: crownjules

Originally posted by: hellokeith
Washington D.C. has proven it does not know how to control spending. This will be the same until America folds.

President Clinton and the corresponding Congress would like a word with you.

Those were the good old days, when republicans acted like republicans.
Then Newt got run out of town and the place hasnt been the same since.

Somehow they lost themselves in the 80's and found themselves again in the 90's. I think the key is that you cannot have one party control two branches of the government.

 

[JEDIYoda]

Originally posted by: techs

Originally posted by: ProfJohn
I think it is a good plan.

EXCEPT: they still rely on the old idea that tax cuts lead to less taxes, and that has been proven false time and time again.

What we need is a plan or idea that controls spending. The problem is the spending, not the tax cuts. We are still growing government spending at like 7% a year WAY to much.

Get the growth figure down to 4-5% where it belongs.

EXCEPT: they still rely on the old idea that tax cuts lead to less taxes, and that has been proven false time and time again.
I must be having a slow brain day. I don't get your meaning. Are you referring to Republicans?

It does not matter who they are what matters is that statement is truthful and accurate!!

 

[ProfJohn]

Techs, I refer to congress in general, or the CBO which is in charge of projections.

They still believe that if you cut capital gains from 28% to 15% you lose all that money from the cut. When reality shows that the cut from 28% to 15% results in more money due to increase capital gains activity.

The fear of those on the right is that the paygo plan will lead to an end of the Bush tax cuts since congress will have to find a way to ?pay? for the tax cuts.
Instead of handing the American people a tax increase find a way to CUT spending. I am sure there are tons of programs that can by cut back. The problem is most of these cuts would require congress to do the ?hard? thing, and congress sucks at tough choices. Much easier to just add new programs and leave the old ones in place.

What congress says: We are going to eliminate the honey bee subsidy.
What congress does: Cut the subsidy by 10-15% and claim a major victory. In the mean time they come up with 15 new programs and in the end they spend MORE money than they did before.

I want a balanced budget as much as anyone else, but I want to balance it by cutting spending, not increasing taxes.

 

[Lemon law]

To Genx87---wrong again as he writes--Those were the good old days, when republicans acted like republicans.
Then Newt got run out of town and the place hasnt been the same since.

Little bit of revisionist history---Clinton and the republicans didn't reach that balanced budget until Newt was run out of town. With Newt there was
hostility and no bi-partisan co-operation--with Newt gone Republican and dems quit their bickering and started to do the peoples business. Both
parties deserve the credit for the only time in recent American history where the Federal government balanced its budget.

Then GWB came in 2001--destroyed all bi-partisanship---and its been red ink ever since.

Lesson---united in common purpose we can plan and act prudently---divided we spend like there is no tomorrow.

 

[smack Down]

Originally posted by: Genx87
I am not totally against this however it could end up like a balanced budget amendment. Spend a bunch then tax a bunch to pay for it.

The problem is spending, not taxation. We are taxed enough in this country to pay for this ridiculous federal govt.

You are correct that speeding is a problem, it is political sucided to be prospeeding cuts. Cutting speeding has no political up sided but if cutting speeding is tied to cutting taxes people would then be more willing to support speeding cuts.

 

[techs]

Originally posted by: ProfJohn
Techs, I refer to congress in general, or the CBO which is in charge of projections.

They still believe that if you cut capital gains from 28% to 15% you lose all that money from the cut. When reality shows that the cut from 28% to 15% results in more money due to increase capital gains activity.

The fear of those on the right is that the paygo plan will lead to an end of the Bush tax cuts since congress will have to find a way to ?pay? for the tax cuts.
Instead of handing the American people a tax increase find a way to CUT spending. I am sure there are tons of programs that can by cut back. The problem is most of these cuts would require congress to do the ?hard? thing, and congress sucks at tough choices. Much easier to just add new programs and leave the old ones in place.

What congress says: We are going to eliminate the honey bee subsidy.
What congress does: Cut the subsidy by 10-15% and claim a major victory. In the mean time they come up with 15 new programs and in the end they spend MORE money than they did before.

I want a balanced budget as much as anyone else, but I want to balance it by cutting spending, not increasing taxes.

Nope. You may get a short lived gain however it has been proven that cutting taxes never raises more taxes. The Laffer curve is a joke that was proven false during Reagans term when Reagan had to raise taxes because his tax cuts didn't raise tax revenue above the level fo the cuts.
I can't believe anyone still believes in the Laffer curve. Well, I guess some people still think the Earth is flat.

 

[Genx87]

Originally posted by: Lemon law
To Genx87---wrong again as he writes--Those were the good old days, when republicans acted like republicans.
Then Newt got run out of town and the place hasnt been the same since.

Little bit of revisionist history---Clinton and the republicans didn't reach that balanced budget until Newt was run out of town. With Newt there was
hostility and no bi-partisan co-operation--with Newt gone Republican and dems quit their bickering and started to do the peoples business. Both
parties deserve the credit for the only time in recent American history where the Federal government balanced its budget.

Then GWB came in 2001--destroyed all bi-partisanship---and its been red ink ever since.

Lesson---united in common purpose we can plan and act prudently---divided we spend like there is no tomorrow.

Huh? He served upto 1998 and set in place policies that helped to enabled the balanced budgets. In case you didnt notice, once he was gone it didnt take long for the republicans to turn into big spenders.

 

[Lemon law]

The Republirats only turned into unrestrained big spenders when Clinton left----with no bi-partisan checks and a brainfart of a President pushing really stupid tax cuts,
we now reap the rewards of a huge increase in debt that will have to be paid back.

Newt==equals GWB===equals total bad for the country stupidity.

But what gains the Democrats made is not matched in the Senate---where the odds are more even---and a few random deaths in a old boys club could well change the balance one or more times in the next two years. So at best the democrats have a defacto veto on excess spending in the legislative branch---and GWB still has his veto pen---but thank God is limited in pushing any unrestrained spending through either. Thats just how the cards were dealt in November 2006---time will only tell on how responsibly--or irresponsibly the game actually plays out as each party plays its cards in the next two years.

 

[Fern]

I think this is a stupid idea, not based on sound economic fundamentals.

In difficult economics circumstances, I believe it is helpful for the government to increase spending for a stimulative effect, and harmful to increase taxes because it has the opposite effect.

If it passes, how long before another Congress votes to reverse it?

Fern

 

[LegendKiller]

Originally posted by: Fern
I think this is a stupid idea, not based on sound economic fundamentals.

In difficult economics circumstances, I believe it is helpful for the government to increase spending for a stimulative effect, and harmful to increase taxes because it has the opposite effect.

If it passes, how long before another Congress votes to reverse it?

Fern

There are very few times in history where fiscal policy has ever made a dramatic difference in the economy. Usually those differences were in times of war (WW2 is the best example). As many of the best economic minds have said in the past, fiscal policy should be the last place to manipulate for economic stimulus.

Now, that being said, spending cannot be a rollercoaster and must adjusted. During times of economic downturn spending will stay even while revenues will decrease, so deficit is OK. However, that deficit needs to be repaid once "good times" start, the rollercoaster, on average, should be paid throughout the economic cycle.

The difference being that Clinton was 50% there, he had it balanced during "good times" but not amortizing. Bush is -50% of the way there, considering he is racking it up during "good times".

 

[LegendKiller]

Originally posted by: Fern
I think this is a stupid idea, not based on sound economic fundamentals.

In difficult economics circumstances, I believe it is helpful for the government to increase spending for a stimulative effect, and harmful to increase taxes because it has the opposite effect.

If it passes, how long before another Congress votes to reverse it?

Fern

There are very few times in history where fiscal policy has ever made a dramatic difference in the economy. Usually those differences were in times of war (WW2 is the best example). As many of the best economic minds have said in the past, fiscal policy should be the last place to manipulate for economic stimulus.

Now, that being said, spending cannot be a rollercoaster and must adjusted. During times of economic downturn spending will stay even while revenues will decrease, so deficit is OK. However, that deficit needs to be repaid once "good times" start, the rollercoaster, on average, should be paid throughout the economic cycle.

The difference being that Clinton was 50% there, he had it balanced during "good times" but not amortizing. Bush is -50% of the way there, considering he is racking it up during "good times".

 

[Thump553]

This is the best idea by far that came out of the bipartisan efforts of Congress and Clinton in the 90's, until it was gutted and abandoned by Bush and his rubber stamp Congress. This is great news for the country under any rational viewpoint.

 

[Fern]

Originally posted by: LegendKiller

Originally posted by: Fern
I think this is a stupid idea, not based on sound economic fundamentals.

In difficult economics circumstances, I believe it is helpful for the government to increase spending for a stimulative effect, and harmful to increase taxes because it has the opposite effect.

If it passes, how long before another Congress votes to reverse it?

Fern

Now, that being said, spending cannot be a rollercoaster and must adjusted. During times of economic downturn spending will stay even while revenues will decrease, so deficit is OK. However, that deficit needs to be repaid once "good times" start, the rollercoaster, on average, should be paid throughout the economic cycle.

Perhaps I don't yet understand this bill, but strikes me as another attempt at a "balanced budget". The possible difference being that only future tax cuts or benefit increases are subject to this rule.

If it's truly PAYGO, in times of shrinking tax revenue, cuts to benefit programs must be made. That's going to be "politically undo-able". If their answer is to raise tax rates during such downturn, I'd say that's stupid.

The way this is explained here, and I'll grant it's a simplistic explanation & there could be more to it, I find it pure politics and zippo economic sense.

I would like at some point to see the possiblility that revenues can exceed expenditures, to help balance out periods where we are deficit spending.

The only upside I see is taht this acts a self-imposed restraint on more deficit spending. But I would emphasize the term "self-imposed".

When there's a pull-out of Iraq, and thus a decrease in spending, will we see efforts by the Dems to use those funds for expending various benefit programs? Gawd, I hope not. But I have no more confidence in this new bunch than the old bunch in terms of self-restraint vis-a-vis spending.

Fern